No deal between Embry-Riddle, Airport Authority

MICHAEL REED and JIM BALTZELLEStaff Writers

Published Saturday, September 13, 2003

DAYTONA BEACH -- Paul Woessner, a program director at Embry-Riddle Aeronautical University, once believed the school would open a satellite campus in St. Augustine for future airline pilots, but now he's looking at other airports.

The school decided Friday not to pursue the St. Augustine-St. Johns County Airport Authority after two lease proposals fell through.

Earlier in the week, Woessner said the company had been treated unfairly by the Airport Authority.

Friday, he said the Federal Aviation Administration has been put on notice of possible violations by the Airport Authority in its business practices.

He said the FAA is looking into the matter.

The Airport Authority contends Embry-Riddle's proposal was contrary to its lease policy, and that no unfairness has occurred.

James Pennington, chairman of the St. Augustine & St. Johns County Chamber of Commerce, said a general lack of communication between the Airport Authority and Embry-Riddle has been a main problem in negotiations. "This is just sad," he said Friday afternoon.

Leaders of the chamber and of the chamber's Economic Development Council recently sent letters to Airport Authority board members asking them to reconsider the school's lease proposal. They said Embry-Riddle would provide a tremendous economic benefit to the county.

The letters received no response, Pennington said, which has been typical in this process.

"Embry-Riddle was treated so poorly," he said. "This is the Yale University of aviation and it was going to come here. Now, it got mad and it left."

He said that aside from what might have been more than a $4.5 million economic impact in the school's first year, the real loss will be more intangible.

"It would be just like having another Flagler College, or a community college, in the community," he said. "That's what every employer wants, more training facilities for the workforce."

The Airport Authority had planned to review its leasing policy Monday and present it to Embry-Riddle.

Two proposals have already been shot down by the board, which Woessner said makes it clear that Embry-Riddle is not wanted in St. Augustine.

"We've got so many other attractive deals, and given the past history of the board, I do not believe that this new policy will be competitive with other airports in Central Florida," Woessner said.

Woessner said he likes the airport in St. Augustine because it has a new air traffic control tower and a sophisticated instrument landing system that makes it easier for pilots at night and in bad weather.

But, despite that, Woessner said he has put the FAA on notice of possible violations in how the airport is run. The FAA will audit the airport to determine how it structures leases with other businesses, he said. When those findings are released, the next step would be to take the airport to court, he said.

Embry-Riddle is working on lease agreements with Craig, Flagler County, Lakeland and Daytona Beach airports. Woessner said the company originally planned to start a course in St. Augustine this fall, but classes were moved to Daytona Beach.

The school would train up to 144 pilots a year and have 35 people on staff. The program teaches skilled pilots about commercial airline aviation. It's the most elite program the school offers, Woessner said.

"This is our jewel," Woessner said.

The latest lease proposal in St. Augustine was for Embry-Riddle to pay $710,000 a year in rent and fuel sales from the airport, Woessner said.

In return, the airport would have completed a $900,000 modification using a $300,000 federal grant to install a classroom in a hangar. Embry-Riddle was to pay a $600,000 penalty if it broke the lease and was to commit to restoring the hangar when it left.

However, authority members said the proposal didn't make economic sense. Member Wayne George asked how the school could expect the authority to spend $900,000 and not pay it back.

But Woessner said that under the proposal, the airport's share of the hangar improvements was to be paid back in a year.

Pennington said the school's presence would have increased commerce at the airport and lowered the authority's dependence on ad valorem taxes.

"I think the Airport Authority's mission is to make the airport a real enterprise center," Pennington said.

Nevertheless, George said, Embry-Riddle should have helped pay because that's what any other commercial enterprises would do. The authority should be run like a business, and it needs a guarantee that Embry-Riddle will pay off construction costs, he said.

"You've got to make the commitment," George said.

When the authority discussed Embry-Riddle in meetings this summer, board member Bob Cox also called for the school to pay for the modifications. And board member Jack Gorman said nine other corporations are waiting for hangars, and they could generate more money for the airport with fuel sales.

"A corporate jet uses more fuel taxiing to take off than Embry-Riddle would use in a day," Gorman said.

Gorman said the airport is running out of space and he didn't want to take an existing hangar and turn it into a classroom. He didn't want to make a parking lot out of land set aside for an apron to help move aircraft.Gorman also said the program would produce too much noise, which could expose the airport to litigation.

Airport Authority Executive Director Ed Wuellner said the board wasn't prepared to make modifications to an existing facility.

Woessner said the modifications were the authority's idea in the first place. Embry-Riddle's original plan was to use another hangar that a corporation was preparing to vacate, Woessner said.

By rejecting the lease, the authority is at risk of losing federal funding, Woessner said. Federal grants make up more than 36 percent of the airport's proposed $17.75 million budget for 2004. The grant percentage is skewed downward because of a special $5 million proposed loan for property acquisition, which would make up about 30 percent of the budget.

The airport is a public facility, and under federal regulations the authority is required to lease hangars to qualified businesses, Woessner said.

"When they discriminate, they breach their agreement with the federal government and compromise their access to federal money to build out the airport," Woessner said.

Wuellner said the potential to lose federal money exists, but the board hasn't done anything to jeopardize that funding. It's a long arduous process that hasn't been initiated, he said.

"The authority has been very, very careful to say the financial terms of the lease are not consistent with the way they want to go," Wuellner said.

But one authority member supported Embry-Riddle's bid to establish the flight school. Member Joe Ciriello said the more the authority could have given the school, the more the airport would get in return.

"If Embry Riddle doesn't pursue it, I can't do anything but wait and see what happens," he said. "I'm disappointed. I hope they don't give up. I support them."

Other board members used economics as a smoke screen to vote for the wishes of the pilots at the airport, Ciriello said.

Gorman said he agreed with the pilots' concerns, but also had additional concerns of his own. The board has done its homework on the issue and knows what's best for the airport, he said.

George said the board weighed the thoughts of the pilots along with everyone else concerned with the airport.

"We've got to do what's best for the county," George said.

Pilots are concerned that the school would only bring more air traffic to an increasingly busy airport. It's a safety issue, said Jim Asselta, president of the St. Augustine Airplane Pilots Association.

Embry-Riddle is a fine organization, but the negatives of the school's proposal outweigh the positives, Asselta said. The airport already desperately needs hangar space, and corporations that use jet fuel could generate more revenue for the airport, he said.

There is no up-side with Embry-Riddle, he said.

"It doesn't really bring anything significant to us," Asselta said.

But Woessner said his program wouldn't crowd the airspace in St. Augustine. The course would only generate 7,000 flights a year, he said. The airport has more than 180,000 flights a year.

Also, pilots in the program would fly from St. Augustine to other counties, he said. If Embry-Riddle uses another airport, the pilots are actually more likely to be over St. Augustine during training, he said.

"In the end we actually owe them a big thank you for creating all these opportunities for better deals than what we were offered in St. Augustine," Woessner said.